New Orleans Death Toll May be Lower Than Estimates; FEMA Director Resigns, Paulison Chosen as Replacement

Aired September 12, 2005 - 18:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LOU DOBBS, CNN HOST: Good evening, everybody. Tonight, exactly two weeks after Hurricane Katrina, emergency workers are finding far fewer bodies than had originally been projected. Estimates of at least 10,000 deaths in the city now appear far too high. We'll have a live report from New Orleans.

On Capitol Hill tonight, the Senate today began confirmation hearings for Supreme Court chief justice nominee Judge John Roberts. Judge Roberts declaring today he has no agenda, no platform.

Tonight I'll be talking about Judge Roberts' nomination with two of the most distinguished legal experts in the country, the well- respected trial attorney David Boies; and former legal clerk to Chief Justice Rehnquist, Charles Cooper.

And the great appeasement:. As President Bush prepares for meet the Chinese premier, the United States is failing to confront China on a wide range of critically important strategic and economic issues. We'll have that special report.

And FEMA Director Michael Brown today has resigned. Three days after he was recalled to Washington, Brown stepped down amid scathing criticism of the federal government's inadequate response to the hurricane disaster.

President Bush today made his third and his longest visit to the disaster area. For the first time, President Bush was in the worst affected parts of New Orleans.

Sixty percent of the city remains clear of floodwater. Dozens of bodies are being found each day. But officials now expect the number to be far lower than earlier estimates of thousands of dead.

We begin our coverage tonight with Jeff Koinange in New Orleans. Jeff?

JEFF KOINANGE, CNN CORRESPONDENT: That's right, Lou. And that number, 279, is what officials are saying today. It was anticipated they have said there will be as many as 10,000 casualties. So far that's very optimistic, Lou, because like you pointed out, 60 percent above water. There's still 40 percent. And some areas water is eight to 10 feet high. Places where rescue workers are having difficulties finding people.

We heard as late as this evening about 45 bodies removed from Memorial Hospital as late as Sunday. They are going house to house, door to door. They are still finding bodies, Lou. The death count, the death toll officially won't be known for still more days and weeks to come, Lou.

DOBBS: Thank you, very much, Jeff.

Officials say five hospitals in New Orleans are now back in operation. As many as 500 beds in those hospitals now available. But those hospitals are virtually empty, because nearly all of the half million residents of New Orleans have either fled from the disaster or been evacuated.

Another major problem for doctors remaining in the city is the loss of medical records. Many medical facilities were simply destroyed by the floodwater and everything inside lost.

President Bush today promised a comprehensive relief effort for all victims of this disaster. President Bush also moved quickly to replace Michael Brown as FEMA director after Brown's resignation today.

Suzanne Malveaux reports.

SUZANNE MALVEAUX, CNN CORRESPONDENT: You're talking to me. Lou, President Bush, of course, was dogged during his trip, the question about Mike Brown, whether or not he still had confidence in his FEMA director. Well, the president no longer has to answer that particular question. That is because, of course, Mike Brown has resigned. He did so even before the president came back here to Washington.

President Bush, of course, trying to move forward with his administration, in fact visiting Mississippi, as well as New Orleans, really in an unprecedented way. We saw him in an open-air convoy, actually taking in some of the sights and the smells of the devastation in both of those areas.

The president returning here to Washington. He has spoken with his Homeland Security secretary, Michael Chertoff. He is aware of the resignation. Mike Brown submitted his letter.

And the president has wasted no time, his administration wasting no time in actually going ahead with a temporary replacement, that replacement being David Paulison of Florida. He is the current U.S. Fire Administration director at FEMA.

Another thing that is quite interesting, Lou. His claim to fame -- this was the person from FEMA who gave an advisory to people in Washington to help them protect against a biological or chemical attack, saying you have to have certain items in an emergency preparedness kit, among them three days of food and water but also talking about plastic sheeting and duct tape to seal windows and doors.

That was something that caused somewhat of a scare in Washington, people running to the stores to get those items. He was also parodied, as well. So we'll see what kind of perception there is in the new person who is now running FEMA.

Lou.

DOBBS: Any idea of how soon we'll see a permanent replacement, Suzanne?

MALVEAUX: We know that the administration wants to move very quickly on this. They're confident that they -- essentially that Paulison will do a good job, but they are looking at a number of candidates, and it will not be long, Lou.

DOBBS: Any sense as to whether or not this person will be a political operative, if you will, versus a professional?

MALVEAUX: Well, they're certainly hoping to stay away from political operatives. That is something that they don't want. What they are looking for, however, is someone who has a great deal of experience and competence when it comes to emergency recovery and disaster efforts.

This is something that the Bush administration was widely criticized over. Mike Brown and many other of those who are in FEMA now who do not seem to have that kind of experience.

DOBBS: Thank you very much, Suzanne Malveaux from the White House.

As President Bush returns from the Gulf Coast, new concern about how well connected big business interests stand to profit from reconstruction in the aftermath of Katrina.

Critics say there are few safeguards in place to prevent rampant overspending and flawed bids (ph) by large firms that are already winning lucrative no bid contracts in the Gulf at the same time as Gulf Coast workers are losing out.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): A subsidiary of Dick Cheney's former company, Halliburton, has been tapped to rebuild Navy bases in Mississippi. KBR received the work as part of a preexisting competitive contract.

Another company, the Shaw Group, won a $100 million reward for relief work, including draining the city of New Orleans. Both companies are represented by Joe Allbaugh, the former FEMA director who served as President Bush's 2000 campaign manager.

SCOTT AMEY, PROJECT ON GOVERNMENT OVERSIGHT: The companies with the best lobbyists, the closest ties to the current administration or the agencies that are awarding the contract are really the ones that are probably going to be steered the work.

SYLVESTER: Of the 124 contracts the Army Corps of Engineers has awarded, 52 have been no bid. A number of Army Corps and FEMA contracts have virtually no spending restraints.

JOSHUA SCHWARTZ, GEORGE WASHINGTON UNIVERSITY: There's no fixed price for the work the contractor is going to do. The contractor gets whatever it costs them to do the work, plus a guaranteed profit on top of that.

SYLVESTER: But the employees who are actually doing the work will likely not benefit from the deals. Last week, the president suspended a Depression-era rule that allows companies to pay less than the average wage under federal disaster contracts.

ROD BENNETT, AFL-CIO BUILDING TRADES: Under the current presidential proclamation, that moneys -- those moneys will not be filtered down to the workers. They will be paid the lowest of the lowest wages. They will be paid what we call in the industry bottom basement wages.

SYLVESTER: Congressional critics fear that contractors will run up the government bill at the expense of workers and taxpayers.

REP. HENRY WAXMAN (D), CALIFORNIA: They're going to squeeze down on what workers get and then inflate what the management is going to be able to rake out as the profit for the company. That's wasting our money and also depriving people who need -- need the income from a hardworking job.

(END VIDEOTAPE)

SYLVESTER: Halliburton released a statement saying the government bidding process is highly regulated and very open. It has many checks and balances.

But Congressman Waxman points out that KBR is being investigated for overcharging the government in Iraq, and he would not be surprised if the same happens in the Gulf region.

Lou.

DOBBS: And at this point, obviously, the Bush administration is capable of reversing itself, having said that Michael Brown had been doing a good job in the early stages and then accepting his resignation now.

Is there any sign that there will be a stepping away from this decision to supersede the Davis-Bacon, requiring paying -- the requirement that would insist on the payment of prevailing wages in the reconstruction areas?

SYLVESTER: At this point, no. I mean, what would really have to happen is we would have to hear about the loud chorus of criticism, which we are hearing from workers.

And I think that that's the voice that really needs to be heard here. The workers who are going to go back to the region who are hoping that these wages will lift up their standard of living. But at this point, Lou, no. DOBBS: And no reaction from the congressional delegations of the area, the Gulf Coast area, most directly affected?

SYLVESTER: They've been pretty quiet on this one, which is pretty surprising, because these are the people who will be electing them or putting them back in office if they choose to.

DOBBS: Lisa Sylvester, thank you.

An encouraging development tonight in Gulfport, Mississippi, which was devastated by this hurricane. Students at St. James Elementary School returning to school for the first time since the storm hit. The private Catholic school is the first to reopen in Gulfport. Students started the day outside with prayers and the Pledge of Allegiance.

The mayor of Gulfport says most of the city's public schools will reopen soon.

Meanwhile, the Red Cross says there are 75,000 Gulf Coast evacuees still living in the shelters. There are a total of 445 Red Cross shelters in operation tonight in 16 states. That is, by the way, down sharply from the 900 shelters that were up and running in the days immediately after the storm. The great majority of Red Cross shelters in operation tonight are located in Louisiana, Texas, and Mississippi, as you would expect.

More on the disaster ahead. We'll have the latest for you on the devastation along the Mississippi coast. And I'll be joined by Senator Trent Lott of Mississippi, whose home was among those destroyed by the hurricane.

And the Senate begins confirmation hearings for Supreme Court Chief Justice nominee Judge John Roberts. I'll be talking with two of the country's most distinguished legal minds about the nomination.

And President Bush is preparing to meet President Hu of China amid charges his administration is appeasing China on critically important strategic and economic issues. Is this the grand appeasement? We'll have a special report for you next.

(COMMERCIAL BREAK)

DOBBS: The Senate today started confirmation hearings for Supreme Court Chief Justice nominee Judge John Roberts. He's a junior appellate court judge who, if confirmed, will become the United States' most powerful legal figure.

Judge Roberts said in his opening statement today that he will be an inclusive judge, respecting the rule of law. Democrats say they will withhold judgment on Roberts until he answers the tough questions.

Joe Johns has the report for us from Capitol Hill. Joe?

JOE JOHNS, CNN CONGRESSIONAL CORRESPONDENT: Lou, this was a day to get the speeches out of the way. There are 18 members on the Senate Judiciary Committee. Everybody got to talk if they wanted to.

Probably the shortest speech of all came from John Roberts himself, about six and a half minutes, very polished and professional. The lawyer that he is, he talked, among other things, about the need for humility in the judiciary.

(BEGIN VIDEO CLIP)

JUDGE JOHN ROBERTS, SUPREME COURT CHIEF JUSTICE NOMINEE: I will decide every case based on the record according to the rule of law, without fear or favor, to the best of my ability. And I will remember that it's my job to call balls and strikes, and not to pitch or bat.

(END VIDEO CLIP)

JOHNS: Now if confirmed, he would be the youngest chief justice since John Marshall in 1801.

He got plenty of advice today from both Democrats and Republicans about how to handle these hearings. Democrats calling for him to be open and complete in his answers to the questions that are going to come up. The Republicans telling him to watch his step.

(BEGIN VIDEO CLIP)

SEN. JOE BIDEN (D), DELAWARE: Judge, if I look only at what you've said and written, as used to happen in the past, I would have to vote no. This is your chance, Judge, to explain what you meant by what you have said, what you have written.

SEN. JOHN CORNYN (R), TEXAS: I know some of the members of the committee will ask you questions that you can't answer. They will try to entice you to abandon the rules of ethics and the long tradition described by Justice Ginsburg. But that should not concern you, Judge Roberts. Don't take the bait. Do not -- do not head down that road.

(END VIDEO CLIP)

JOHNS: The hard part, of course, starts tomorrow when he does start taking questions from members of the committee.

A couple other notes today. Senator Dianne Feinstein of California reiterated her position that it be very hard for her to vote for a justice who would not support Roe versus Wade.

Back to you, Lou.

DOBBS: Joe, thank you very much. Joe Johns from Capitol Hill.

Our senior legal analyst, Jeffrey Toobin, joins me now with his thoughts on the day's opening statements, those by Judge Roberts and members of the Senate Judiciary Committee. Quite a performance -- over three hours of statements by the senators, looking to find out what the nominee thinks, and the nominee talking for six and a half minutes. JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, he is obviously a graceful and intelligent man. And he spoke without notes, with no prepared text, which is something people rarely do in Washington.

But his metaphor that he used repeatedly was he's just the umpire. He's not a player in the game. You know, Lou, I'm not sure that will really wash, because a Supreme Court justice can make up the rules. He's not just calling balls and strikes. So tomorrow we start to learn a little bit, at least, about how he's going to make the rules.

DOBBS: Will we really, though, Jeffrey? The fact is, as you heard Senator Cornyn and others admonish the nominee not to take the bait, not to go down that road. Wouldn't he be a fool to answer some of those questions?

TOOBIN: Well, he certainly won't answer them all. But I actually do think that we will learn something about his judicial philosophy. He will answer in some way, do you believe that there is a right to privacy in the Constitution?

At the moment five of the remaining Supreme Court justices think there is a right to privacy. Two -- Thomas and Scalia -- don't. Neither one is right or wrong. It's just how you interpret the Constitution. I think we'll learn something about that.

You know, there's a big turf battle between the judiciary and the legislature over who has the power over -- you know, the power of Congress to regulate the economy. We'll learn something about Roberts' views there. Sure, we won't know in detail, but we'll know a lot more than we know today.

DOBBS: And do you really think we're going to have a sense of where he stands at the end of it? And any judgment on affirmative action on Roe v. Wade, the commerce clause, the right of privacy, just to name a few?

TOOBIN: You know what? I do, Lou. I can tell you're skeptical all the way here in Washington.

DOBBS: You're right. You're right.

TOOBIN: But I do. I do actually think we will have a pretty good sense of which way he's going, and we'll see tomorrow whether I'm right or wrong.

DOBBS: Well, you're usually right. And that's one of the many things that we like about your insight. Thanks very much, Jeffrey Toobin.

TOOBIN: Thanks, Lou.

DOBBS: Later here, I'll be joined by distinguished attorney David Boies, one of the country's best known legal and best legal minds, and former Rehnquist legal clerk Charles Cooper with their views on today's beginning to these confirmation hearings. Coming up next, the great appeasement. Critics say the United States is simply too soft on China, on unfair trade, its harsh crackdown on the media, and China's rising military power. In fact, they're calling upon the president to take a much harder line against China. A critical meeting begins tomorrow. We'll have that special report.

And then, Mississippi, a state struck by Katrina. Senator Trent Lott is one of thousands of people who lost their home in Hurricane Katrina. He joins us to talk about his family, his home state rebuilding.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: This week, President Bush will step away briefly from the hurricane relief effort to meet with President Hu of China in New York.

Tomorrow's meeting between the two leaders comes at a critically important juncture in U.S.-China relations. The Bush administration is facing escalating criticism for what some call its appeasement of China on a wide range of military, economic, strategic and political issues.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): President Bush has met China's President Hu Jintao before. And this time, few expect anything different, saying President Bush is not likely to call out China on its behavior.

PETER BROOKES, HERITAGE FOUNDATION: The administration has what they are calling a constructive, a candid and a cooperative relationship with China, but obviously our interests are not always the same with China. China, I would even say that China is no longer a rising power but it's actually a risen power. And there are interests that not always in sync with the Chinese.

PILGRIM: In fact, China's actions have been at odds with U.S. interests. Specifically, China this year passed a law that authorizes the use of force against Taiwan.

China's military build-up continues without stop -- the third largest defense budget in the world, with double-digit increases over the last decade.

In trade, Chinese piracy of U.S. intellectual property continues. China has closed its market to Western media distribution in recent months. And China's aggressive bid for strategic energy resources prompted deals with such countries as Sudan, Iran, Venezuela. And China's bid for a U.S. oil company was met with fierce debate in Congress. Human rights in China are still abysmal, yet experts point out there is reluctance to speak out aggressively on many of these issues because of the U.S. trade deficit with China.

CLYDE PRESTOWITZ, ECONOMIC STRATEGY INSTITUTE: The administration wants continued cooperation from China, and so I think that's going to be cooperative and conciliatory. So I don't expect fireworks in these discussions.

Unfortunately, we're kind of on life support from the Central Bank of China. We need $2 billion a day of financing from China every day to finance our trade deficit. And therefore, you know, it's sometimes hard to be really tough with your banker.

(END VIDEOTAPE)

PILGRIM: Experts say another reason why the rhetoric may stay mild is the Bush administration still hopes for Chinese help in the North Korea talks which are beginning again in Beijing. So, despite the friction on other issues, experts say the discussion between the U.S. and China is expected to stay very plight and diplomatic, Lou.

DOBBS: Uneventful, unhelpful. It's remarkable, Clyde Prestowitz, as he pointed out, saying straightforwardly what everyone knows: this country is on life support, entirely dependent upon China's good credit in our markets.

PILGRIM: Yes, and the trade surplus just keeps rising, despite the sort of token currency adjustment.

DOBBS: Two and a half percent you consider token?

PILGRIM: Well, far be it from me to suggest that.

DOBBS: Kitty Pilgrim, thank you very much.

A new spying scandal in this country tonight. An FBI intelligence analyst has been charged with passing classified information to current and former officials in the Filipino government. A former deputy director of the Philippines National Police living in New York has also been charged. Prosecutors saying the FBI analyst sent information about Filipino leaders to the former police official, who then passed that information on to the Philippines.

Coming up next, I'll be talking with noted trial attorney, one of the most distinguished legal minds in the country, David Boies. We'll be talking about the confirmation hearings for a chief justice of the United States, the first in nearly two decades, in fact.

And ahead Senator Trent Lott is demanding more federal help for thousands of his constituents who lost everything in the hurricane. He is our guest here next.

And then, "Assault on the Middle Class" -- gasoline prices, home heating oil prices, electricity prices, all rising. Now the Treasury Department has come up with an idea. It wants to raise credit card charges for millions of Americans. We'll have that special report next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Our Deborah Feyerick is monitoring all of the very latest developments in the Gulf Coast crisis, joining us now with a status report. Good to have you he here.

DEBORAH FEYERICK, CNN CORRESPONDENT: Thanks, Lou. Well, status alert a little bit of a scare when water started flowing back out over a section of the levy that had been fixed. There were reports the levy had broken. Turns out water being pumped out of the Lemon Street Canal started coming out over the top, because the water pressure was too great. Crews have now fixed that problem.

Status alert on Louis Armstrong Airport. The field hospital set up to treat evacuees is now gone, and a very limited number of passenger flights are expected to begin again tomorrow: two going in, two going out. Northwest Airlines flying round trip from Memphis, Tennessee. Other airlines expected to return by the end of next week.

Final status alert: businesses' special reaction teams, almost like SWAT teams from the Department of Homeland Security secured the Marriott Hotel this afternoon. Agents went top to bottom and tactically cleared every room before securing the building.

High rises being searched before any workers are allowed back in.

And of course, for anyone who has any information on a parish or town, they can e-mail us at StatusAlert@CNN.com.

Lou.

DOBBS: Deborah, thank you very much for the update. We appreciate it.

My next guest is one of the thousands of people who lost a home in the hurricane. Senator Trent loss's waterfront house in Pascagoula, Mississippi, was blown away in the storm. He's been working ever since to secure help for the devastated Mississippi coast. Senator Lott joins us tonight from Capitol Hill.

Senator, good to talk with you. We know that the entire region there on the coast was devastated. Give us a sense of how that response is going now?

SEN. TRENT LOTT (R), MISSISSIPPI: Well, first this has just been an overwhelming disaster, the proportions of which we probably never have seen in this country before. And you need to understand that.

I think everybody was overwhelmed at first and perhaps undermanned and in some instances we just couldn't get the right people in the right place quickly enough. But by the way, that was a real challenge. I know getting there myself was a challenge right after the hurricane. But I think we are making progress now. Every day seems to get a little better. We're staying in touch with the mayors, the supervisors, the first responders, the people on the ground. And we've gotten through the immediate aftermath, where people needed just basics like water and ice and food and generators and clothes and baby formula.

Now we need emergency housing. That's the biggest difficulty we have right now. Getting these temporary houses, mobile homes positioned where we can get them to the people has been slow. And it's still going to be a few more days.

And of course, we're still in the throes of a massive cleanup, which will still take weeks. But, Lou, I think we're making some progress now.

DOBBS: Good.

LOTT: It feels better today.

DOBBS: And lost sight of, unfortunately, in some cases has been the devastation that hit your state, because of the magnitude of the disaster that befell New Orleans. But Mississippi has almost as many people confirmed dead tonight as the city of New Orleans.

LOTT: As a matter of fact, we've had more people confirmed dead and was by pretty good margin than Louisiana. But I think our number is, like, at 214. I think Louisiana is about the same.

DOBBS: Right.

LOTT: Plus the devastation was the same, although different. Ours came in on the day of the hurricane with wind and water, rising water, a surge of 20 to 30 feet, and it just cleaned out areas that had been there for 150 years, had never been wiped out by hurricanes before.

Louisiana's came after with the dikes breaking, the levees breaking and the water rising in New Orleans. It's a bigger city. It's gotten a lot more of attention.

Plus, you know, the spirit of people in Mississippi has been one of, "look, let's cry together, let's sweat together, let's work, we're going to come back. Mississippi is going to rise again to do the right thing for our people and get our economic engine going."

And we have had a lot of good effort by state and local officials.

But we have been a little bit -- we feel a little neglected sometimes. In fact, just this afternoon, as we get good people in place from FEMA or somebody really good working with trailers, all of a sudden we hear: They are going to move them to Louisiana.

And we're beginning to rear up and say, "Now, wait a minute. Once we get somebody good, don't take them from us."

So we felt somewhat overshadowed.

But, look, when you are suffering and you have people that are miserable, you don't start arguing over scraps. You just try to help them all.

And so we haven't been in a position of complaining about that, Lou.

DOBBS: Well, Senator, as you know, that hasn't always been the tone certainly in New Orleans and in Washington, D.C., in the aftermath of this hurricane. FEMA Director Brown today resigning.

Is it your sense that puts that phase behind this and will allow for better focus on recovering and rebuilding?

LOTT: I believe so. You know, what happened with him may have been unfair. There's probably a lot of history of why FEMA wasn't quite ready to do what they needed to do as quickly as they did.

But I believe we're beyond that now and that there are good people moving in. We got Admiral Thad Allen who is doing a real good job on the ground. I believe we're getting people in key positions now to really help.

So I don't want to dwell on the negative. I want to deal with the problems of today and the solutions for tomorrow.

DOBBS: I know your office is working very hard to cut through the bureaucratic red tape and nonsense that is involved in anything to do with the government.

LOTT: Right.

DOBBS: But it sounds as though there's a great movement being made now. But I don't think anyone should have an illusion here. The coast of your state was devastated. It's going to take, in your judgment, how long to get everything back running?

LOTT: Lou, it will take weeks, months and, yes, years. It will probably be five to 10 years before we get the coast back economically as strong and people get their homes back in place.

But we're not just going to try to clean up and recover. We're going to try to learn from the past and come up with some innovative ideas to do an even better job, make it a better place than it ever was before.

DOBBS: You got an estimate on damages?

LOTT: In our state, it would be purely a guess, but the insurance industry is talking probably $30 billion.

I think that this is going to wind up probably being a $150 billion disaster, and that may be low.

DOBBS: My goodness.

Well, Senator, thank you very much.

A host of issues we want to talk about. I know your focus is broad and you're capable of a number of issues, but we're going to focus for now on the most immediate problems of your state, and that's recovering from this horrendous storm.

Senator Trent Lott, thank you.

LOTT: Thanks, Lou.

DOBBS: Tropical Storm Ophelia, now 200 miles off the East Coast and slowly moving northward, remains a threat to the Carolinas tonight. The forecasters are still uncertain when or even whether Ophelia will make landfall. Ophelia weakened from a Category 1 hurricane into a tropical storm earlier today, but it could regain hurricane strength, and we're told that might happen even soon.

Both the tropical storm warning and a hurricane watch are up for much of the South Carolina coast tonight. Nonresidents are being asked to evacuate North Carolina's Outer Banks, and the latest computer projection shows the storm brushing across the North Carolina coast early Thursday, then moving further northward.

The devastation of Hurricane Katrina and its impact on gasoline prices and other energy costs comes as the middle class in this country is already under assault and vigorously so. Now, the Treasury Department has come up with a new idea, and it has opened a new front in that assault. It is forcing credit card companies to double the minimum payment for millions of Americans in debt.

Bill Tucker reports.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): The Treasury Department is doubling the minimum payment amount credit card users must pay by the end of the year. The rule will be phased in over the next few months.

The average American is $9,000 in debt, which means that the typical minimum payment will be going up by roughly $200 a month, or $2,400 a year.

Why? According to a Treasury Department spokesman, it was noticed that in some cases, the minimum payments were not reducing debt, and we thought a minimum payment should reduce the debt. A good intention, but it is a rule change which could not come at a more difficult time.

LEE PRICE, ECONOMIC POLICY INSTITUTE: Incomes are not rising to keep up with inflation. And inflation is being driven not just by fuel prices, but by property taxes and by health care costs. And those people are not -- they are having a hard time keeping their head above water.

TUCKER: The bottom line effect could be disastrous for some families.

DEBORAH THORNE, OHIO UNIVERSITY: To be perfectly honest, I don't know where they are going to come up with that additional $200 to make up the difference. If it pushes them into bankruptcy, those doors have been closed for many of them.

TUCKER: And that's not dealing with what many see as a far greater and more risky form of debt -- mortgages. At the end of the first quarter, mortgage debt totaled almost $8 trillion, nearly four times that of consumer debt.

In the last year, 30 percent of all mortgages issued were no- interest loans, Lou.

DOBBS: Well, the Treasury Department in its brilliance is ignoring those interest-only mortgage loans, which are far bigger payments, far bigger debt. What in the world are these people thinking about?

TUCKER: I couldn't tell you, Lou. We called them and got a statement on what they were thinking about when it came to credit card debt. Today, they had no comment on mortgages.

DOBBS: Well, let's just go through that again. What were they thinking?

TUCKER: I don't know. It's difficult. Fixed costs. Heating, home, medicine, food. Where do people find the money is the question that I (INAUDIBLE).

DOBBS: That's the question, but the question I am asking is, how can the Treasury Department rationalize this?

TUCKER: Don't have an answer for you, Lou.

DOBBS: All right, Bill, thank you very much. Bill Tucker.

Still ahead here, Governor Arnold Schwarzenegger of California is locked in a battle with his state's lawmakers. And now he's asking California voters to make some key decisions that apparently the legislature and the governor couldn't decide on their own. We'll have a special report.

And then Chief Justice nominee Judge John Roberts preparing to defend his record before the Senate. I'll be talking with distinguished attorney David Boies and former clerk for the late Chief Justice Rehnquist, Charles Cooper, here next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Large parts of Los Angeles today lost power, for several hours. Seven hundred thousand customers affected after a power worker apparently mistakenly cut the wrong line. According to the Los Angeles Department of Water and Power, that simple mistake set off a cascade of breakdowns in the city's power grid. People were trapped in elevators and high-rise buildings. Traffic lights lost power, causing gridlock all across the city.

Most areas had power again, however, after a few hours.

The Department of Homeland Security said there was no indication of foul play -- reference back the worker, who inadvertently cut the wrong line.

Political problems also persist in California tonight. California's Governor Arnold Schwarzenegger took office in 2003. He promised to change the state's dysfunctional politics. Tonight, however, the governor is at odds with the state legislature over three controversial new measures, all of which he has vowed to veto.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: And what did they do, they sent the Terminator to Sacramento, right?

WIAN: But two years later, the state remains stuck in economic and political quicksand. The just concluded legislative session ended in failure, with lawmakers passing bills to give drivers' licenses to illegal aliens, legalize gay marriage, and increase the minimum wage, and with the governor promising to veto all three.

SCHWARZENEGGER: We don't have enough schools. We don't have enough roads. We don't have the infrastructure for transportation or for our ports. We don't have enough electricity. We don't have enough water.

WIAN: But the governor and the legislature have been unable to figure out how to make all that happen. So Schwarzenegger wants the voters to do what their elected representatives seemingly can't. He has called a $55 million special election for November. Voters will again decide several issues critical to California's future.

UNIDENTIFIED MALE: It seems like as a voter, I have been going to the polls almost weekly for the past two years.

SCHWARZENEGGER: If you break your arm today, would you wait for your next physical? Or would you go to the hospital and get it fixed right now?

Let us reform the system, a system that is stuck in the old way. This is a battle of the governor and you, the people of California, versus the status quo. That's what the battle is all about. And we are going to win that battle.

WIAN: But all of the measures the governor supports -- delayed tenure for teachers, state spending limits and redistricting perform -- trail in the polls, and Schwarzenegger's approval rating has sunk to just 36 percent. Even so, he's expected to announce his bid for reelection this week.

And to underscore how California's problems persist, huge sections of Los Angeles lost electrical power today.

(END VIDEOTAPE) WIAN: Now, only a year ago, Schwarzenegger was immensely popular, and some Republicans even wanted to change the Constitution so he could run for president. Now, he's squandered most of that goodwill, and his approval rating is only 10 percentage points higher than Gray Davis', the governor Schwarzenegger replaced in a recall election in 2003.

Lou.

DOBBS: California is a tough place. Casey, thank you very much. Casey Wian.

WIAN: Absolutely.

DOBBS: Senate Judiciary Committee members began their questioning of Supreme Court -- began their questioning next -- the next chief justice, the nominee, at least -- John Roberts tomorrow. In his opening statement today, Judge Roberts, surrounded by family members and friends, assured committee members that he would be a fair chief justice, ready to uphold the rule of law.

(BEGIN VIDEO CLIP)

ROBERTS: If I am confirmed, I will be vigilant to protect the independence and integrity of the Supreme Court. And I will work to ensure that it upholds the rule of law and safeguards those liberties that make this land one of endless possibilities for all Americans.

(END VIDEO CLIP)

DOBBS: Distinguished attorney David Boies, who represented Al Gore before the Supreme Court in the 2000 election recount case joins me tonight with his insight into this confirmation process. Democrats on the Judiciary Committee say they will aggressively question Roberts to make certain he is not in their words, a conservative ideologue. David, is that possible to determine?

DAVID BOIES, ATTORNEY AND LEGAL ANALYST: I don't think it's entirely possible. Because obviously, what happens at a confirmation hearing, everybody knows what the purpose is. And so the nominee typically, as I think, Senator Specter said in his opening statement, tends to answer as many questions as he thinks he has to answer in order to get confirmed.

But I think you can get at some critical issues, because I think Judge Roberts is basically an honest man. And I think he will give honest answers.

DOBBS: What are the issues? I mean, there are a host of issues that are obviously concerning Senator Feinstein today. Eloquently and very personally dealing with the issue of Roe v. Wade, abortion. Can we go much farther on this issue in exploring his thinking?

BOIES: I think one of the ways you can get at it -- because I don't think he's going to talk about a specific case -- but I think one of the ways you do get at it is you ask about stability. You ask about the role of stare decisis. You ask about his respect for the rule of law that he's already spoken about today.

And what you try to do is get a sense of is this somebody who wants to come in and change the decisions, the bedrock decisions that the court has made? Or is he somebody who's willing to go forward and interpret those decisions?

DOBBS: Are you satisfied, from his previous confirmation process and hearings, when he said that as far as he was concerned, Roe v. Wade is settled law. Does that, if you will, settle the matter?

BOIES: I accept that at face value. I think there are going to be people who are going to want to hear him say that and say that as directly as a Supreme Court nominee as he did as a court of appeals nominee. But if he says that, I'd believe him.

DOBBS: And if he says what, on terms of the commerce clause? The right of privacy, which he has suggested previously he does not believe exists within the Constitution, in some cases. A host of these issues -- affirmative action. Do you think we'll get to the bottom of his thinking on those issues? And should we?

BOIES: Well, I think ideally, you would know what you're getting when you appoint and confirm a Supreme Court nominee. I think you never do. And I think that some of the people who are sitting now and some of the people who have sat in the past have demonstrated how difficult it is to know what you're getting. And we're not just talking about the people on the court now; it goes back to Earl Warren.

DOBBS: Let me, if I may, David, show you and our viewers at home, Tom -- the Senate today had a most unusual moment, when there was a statement by one of the senators, a prepared statement, and he literally became emotionally charged and -- on the issue of the divisiveness, the partisanship. So if we could just show that.

(BEGIN VIDEO CLIP)

SEN. TOM COBURN (R), OKLAHOMA: When I ponder our country and its greatness, its weaknesses, its potential, my heart aches for less divisiveness, less polarization, less finger-pointing, less bitterness, less mindless partisanship, which at times sounds almost hateful to the ear of Americans.

(END VIDEO CLIP)

DOBBS: Senator Tom Coburn of Oklahoma, David, talking about the partisanship, the rancor, which sounds, as he said, to the ears of most Americans like hate speech.

BOIES: Yes.

DOBBS: We're watching a man who you have said is brilliant, a man of temperance, brilliance in the law, and yet we're watching what in some ways looks like a kabuki dance on the Judiciary Committee. How can we move forward with a man of this obvious talent, obvious intellect, a man of stipulated character, and reduce the process to what has become to me frankly -- I agree with the senator, partisan bunch of nonsense.

BOIES: Everybody would like to end this polarization, the rancor. I do think it's important we look back and see where that rancor began. Because I think both parties bear a substantial share of that responsibility.

DOBBS: And I thought that was a stand-up thing to do, and I thought maybe this is a step toward removing this.

BOIES: I think some of the things that Senator Graham and Senator Hillary Clinton have done together have been a real step towards trying to bridge that polarized divide. And I commend both of them for that work.

I also think that if you listened to both Senator Specter from the Republican side, and Senator Leahy, the ranking Democrat today, what you heard were two senators trying to approach this in a nonpartisan way. They are both partisans, obviously, but they were approaching this issue in a nonpartisan way.

DOBBS: And both Senator Leahy and Senator Specter have said on this broadcast, in point of fact, that they agree on one thing, they don't want a judicial activist of any cloth or cloak.

BOIES: Exactly right.

DOBBS: And I got to ask you, as we conclude here, one statement that Judge Roberts made, which was in six and a half minutes after four hours of listening to U.S. senators, saying that he recognizes his role as an umpire, a man who would be calling balls and strikes. I love the simplicity. Is it -- is it representative of the job that awaits him?

BOIES: I don't think it's quite representative, because Supreme Court justices have to do more than call balls and strikes, because sometimes they are making up the rules.

But I do think the spirit that he says that in is the right spirit for somebody who is going on the court.

DOBBS: David Boies, thanks for being here, as always.

BOIES: Thanks.

DOBBS: Good to have you here.

BOIES: Good to see you.

DOBBS: Still ahead, I'll be joined by Charles Cooper. He served as a law clerk for the late Chief Justice Rehnquist. We'll be talking about, you guessed it, the Roberts confirmation hearings. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Joining me now from Washington D.C. attorney Charles Cooper, legal clerk for justice -- Chief Justice William Rehnquist. He was also a colleague of Judge Roberts, serving in the Justice Department in the Reagan Administration. Let me begin, do you believe that six-and-a-half minutes of statements by Judge Roberts puts us on the way to a peaceful nonpartisan path over the course of the next few days?

CHARLES COOPER, FORMER REHNQUIST LAW CLERK: I don't think we're going to have a peaceful nonpartisan path, but I do think that John's opening statement was elegant and eloquent, and it set forward the, I think, the basic fundamentals of his approach to judging the role of the judge. As you mentioned earlier, Lou, he said he's not going to be there to -- with an agenda to call balls and strikes. That is to -- but only to call balls and strikes. He's not there to pitch the ball or to bat it. And I think that's the spirit in which John genuinely approaches the role of the courts.

DOBBS: Judge Roberts, as David Boies and I were just discussing here, is a man generally acclaimed to be a brilliant legal mind. A man of great character. Obviously he's committed his life to public service. Done tremendous pro-bono work with one of the most prestigious firms in Washington D.C.. What's the deal here? Why not just give it a rubber stamp and move ahead?

COOPER: Lou, in my opinion, a man of John Roberts' qualities, both professional and personal, should detain the Senate judiciary committee very little time before they confirm him. And I do believe that he is destined for a relatively easy confirmation. One thing we know about John, and it speaks volumes about the nature of this man, for 30 years he has toiled in the Washington legal community. Facing adversaries of all kinds and cases of a very controversial nature and everybody just loves him.

DOBBS: On the other hand, Roe v. Wade -- he said before it's settled law. He has also talked about some qualifications to the right of privacy. Are we going to see in your judgment, hear in your judgment, clear unequivocal statement of his philosophy on those two very important issues, that is a woman's right to abortion and the issue of privacy as the foundation for a number of critically important decisions including abortion?

COOPER: Lou, no, we're not going to hear such a statement from John Roberts. And we ought not hear such a statement. It's -- it would be a violation of judicial ethics as well as prudence for him to predict now or prejudge how he would rule on that critical issue when it comes before him in the context of a real case with real facts and real arguments from the interested parties and real dialogue with his colleagues on the court. These are the things that give shape and meaning to the decision making process. And that's not something you can replicate in a five-minute exchange with a Democratic senator.

DOBBS: Or, over the course of several days. You make it sound as though this is basically, if you will, legal and political theater without substance as we -- it actually as you hear senators, the one admonishing him to say clearly his philosophy and others admonishing him to not take the bait. One wonders about the process altogether.

COOPER: Well it is kind of a paradox for this process, actually, because the judge has to be careful to keep an open mind. At the same time, the judge has to do his best to be as responsive and open and as honest and as he can with the Senate. And I think John is going to try to walk that line as carefully as he can, but to be responsive and open but mindful of his ethical obligation as a judge never to prejudge issues that will come before him should he be confirmed to the Chief Justice position.

DOBBS: Charles Cooper, thanks for being here. Appreciate it.

COOPER: Thank you.

DOBBS: Still ahead, preview of tomorrow's broadcast. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Judith Miller, Pulitzer Prize-winning "New York Times' reporter, has now spent 68 days in prison for protection her confidential sources in the White House CIA leak case. That investigation has now lasted longer than Watergate, and still no resolution.

Thanks for being with us tonight. Please join us here tomorrow. Our guests include Senator Jeff Sessions of the Judiciary Committee, and Tony Blankley of the "Washington Times." Be with us. For all of us here, Good night from New York.

ANDERSON COOPER 360 starts right now. Anderson?

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com